IRS stands by ID’s for preparers amid challenge to its authority

The Internal Revenue Service will continue requiring tax preparers to obtain a tax identification number, the agency announced Monday, days after the most recent ruling in a case challenging its authority to regulate preparers.

Monday’s action permits IRS to continue, as tax filing season revs up, to use some 700,000 preparer identification numbers it is already using to monitor performance.

Under recently departed Commissioner Doug Shulman, the tax agency—urged on by large tax service providers such as H&R Block and Intuit—launched an effort to improve the competence of return preparation services by requiring each to file online for a preparer identification number to allow their work to be tracked as well as enroll in continuing education courses leading to examinations for certification. The goal is to reduce fraud and identify theft.

Three individual tax preparers objected to the new regulation. They filed a lawsuit brought by the Arlington, Va.-based libertarian Institute for Justice, which argued that the IRS as an administrative agency lacked authority to regulate the profession.